How To Avoid Amazon Vendor Chargebacks

Amazon Vendor Chargebacks

Amazon Vendor Chargebacks are one thing that your business should avoid at all costs.

For the average individual, a late fee for returning a library book is simply an inconvenience. It is a minor setback and soon forgotten about. But for an Amazon Vendor, chargebacks are the silent killer of profits.

But if you are an Amazon Vendor, then you are dealing in enormous quantities. You are balancing production and fulfillment while calculating extraordinarily precise profit margins in order to run a successful business.

We are here to explain which chargebacks you might encounter as an Amazon Vendor. After that, we will tell you exactly how to avoid these chargebacks and create a more compliant, smoother Amazon Vendor business!

What Are Amazon Vendor Chargebacks?

Types of Amazon Vendor Chargebacks

Purchase Order Chargebacks

ASN Chargebacks

Preparation / Packaging Chargebacks

Receive Process Chargebacks

Direct Fulfillment Chargebacks

How To Avoid Amazon Vendor Chargebacks

What Do You Need For An Amazon Vendor Chargebacks Tool?

So before we get to how to avoid these chargebacks, let’s take a look at what they are.

What Are Amazon Vendor Chargebacks?

They are a retaliatory measure that Amazon uses to ensure consistent and reliable service from its Vendors. However there are some who suggest that Amazon deliberately complicates charges to make extra money. Every single Amazon Vendor must adhere to the levels of service required, or be dealt Amazon Vendor Chargebacks as a result. 

These can range from a percentage charge, to a flat fee. Depending on what they are related to you could face hundreds of tiny charges that, once added up, are not so tiny.increase-ecommerce-revenue

We have talked about businesses who fail to account for fulfillment by Amazon fees and the consequences of those actions. However, Amazon Vendor Chargebacks can be even more debilitating for businesses.

Types of Chargebacks

There are several types of Amazon Vendor Chargebacks which your business could be in breach of. They each occur along the production and delivery journey and have different levels of severity involved.

Purchase Order Chargebacks

These are errors related to your Purchase Order (PO) and they come under 3 different categories – Not On Time, Not Filled and Down Confirmed

The first is the most simple. Perhaps your Freight Ready Date (FRD) was set outside the ship window as set on your PO. Or your Carrier Requested Delivery Date (CRDD) was outside the window set out on your PO. If either of these events occur, then you can face Amazon Vendor Chargebacks of 3% of the cost of every product that was non-compliant!

The second is Not Filled. You failed to send the products confirmed on the PO before the PO auto-cancel date. As you have failed to provide your services, you are charged a full 10% of the cost of every product that is auto-cancelled!

Finally you have Down Confirmed. This event is when you reduce the confirmed number of units on the PO five calendar days after the start of the ship window. Any changes made after this time period incur a chargeback of 3% of the total cost for the missing units.

Advanced Shipment Notification (ASN) Chargebacks

An ASN is the method of communication between Vendors and Amazon in relation to shipment content and carrier tracking.

ASN chargebacks occur when items arrive at the fulfillment centre before receiving an ASN, or by submitting an ASN with missing or incorrect information. This can be anything including:

  • Incorrect quantities
  • No Expiry Dates 
  • Progressive Tracking Number (PRO) and Bill of Landing (BOL) do not match

ecommerce-toolsAny errors could be costly, with chargebacks varying from between 1% – 6% of item cost. This amount can vary depending upon your levels of previous compliance as well.

Preparation / Packaging

Preparation chargebacks relate to how your products are packaged. If your products are incorrectly prepared for delivery, then Amazon Vendor Chargebacks will apply. 


There are many criteria including

  • Bubble Wrap – Ensuring fragile objects are bubble wrapped for safety
  • Taping – Loose items must be taped
  • Boxing – Easily damaged and loose products must be boxed
  • Bagging – Products in danger of dust or leakage must be bagged
  • Opaque Covering – Products with vulgar language or nudity must be opaquely    covered
  • Suffocation Warning – Bagged packages require a suffocation warning
  • Set Creation – Multipack items must be packaged together securely and labelled as a set
  • Hanger Removal – All clothes require removal of hangers before shipment

Each chargeback on non-compliant products will be charged as a percentage of the cost per unit.

Receive Process Chargebacks

Once at the Amazon Warehouse, your products must undergo the challenge of Amazon warehouse processing. 

These Amazon Vendor Chargebacks are related to a number of things including:

  • Missing PO Labels
  • Missing / Incorrect / Unscannable barcodes
  • Unapproved packaging materials
  • No Carton Content Labels
  • Overweight / Oversized Cartons
  • Expired products

These Amazon Vendor Chargebacks can be anywhere up to 25% of the cost of each carton. That is a huge cost for your business – and not one that can be written off on your taxes each year!

Direct Fulfillment Chargebacks

These chargebacks only appear when Vendors use a direct fulfillment method (shipping orders directly to a customer via your Vendor Central account without first sending your product to an Amazon warehouse.)

These can be cancellation charges or incorrect shipping method charges. measure eCommerce

You will receive a $10 chargeback for every cancellation of an existing order or for a denial of an incoming one (another reason to make sure that your inventory is up to speed!) Another $10 charge is made for every delivery that is provided via a different method or carrier than that which is stated in the original order.

How To Avoid Amazon Vendor Chargebacks

In reality, there is only one way to avoid these chargebacks:

Stay Compliant

It is easier said than done for businesses. With a number of staff, large orders and dozens of possible mistakes it is difficult to stay on top of it. Shipping and compliance are labour-intensive efforts that not only take time, but often require double-checking.

That is why an Amazon compliance tool helps your business stay on top of all of these problems. 

Just one tool that ensures compliance with Amazon-imposed restrictions ASN, LPR Labels, and Invoicing

Not only that, but a tool that can consolidate shipping easily. One that can suggest grouping together shipments based on their destinations to provide you the easiest method of getting out as many products as possible.

How about the same tool creating LPR compliant labels for your cartons, which then automatically saves and sends the information directly to Amazon?

All of this is possible with Vendor Central Connect. A tool which has helped combined clients enjoy business growth of up to 689%.

Dispute Chargebacks

It is possible for Amazon to make mistakes, and they do!

That is why every chargeback can be disputed within 30 days of issue – so make sure you do!product-research-tool Amazon may insist that the chargeback still stands, but you can dispute it another time after that.

One way to ensure that your disputed chargebacks are resolved is to:

Provide Evidence

With Vendor Central Connect, you not only achieve compliance (to avoid those Amazon Vendor Chargebacks) but you also have an entire history of your records available with this tool.

That way you make sure you have the evidence you need to successfully dispute any incorrect Amazon Vendor Chargebacks!

What Do You Need For An Amazon Vendor Chargebacks Tool?

Just an Amazon Vendor account!

There is no additional software required to use Vendor Central Connect. It simply sits between your ERP and Amazon Vendor Central. With a very short integration checklist, your business can enjoy growth with zero hassle on your end.

The process happens extremely quickly. In fact, our typical integration plan is rolled out in just 6 weeks. That entire process covers data validation, testing and intensive training to make the most out of the tool.

So get in touch with a member of our team today, and in a month and a half your business can look forward to a future free of Amazon Vendor Chargebacks. No more mix-ups or extra diligence. Just a smoother, quicker business workflow that allows you to take your business to the next level!


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